A:
a. discount rate.
b. tax rate.
c. inflation rate.
d. riskfree rate of return.
Answer: C
Since the real rate of return measures the investor's rate of return in excess of the inflation rate.
RELATED FAQS

The real rate of return is the amount of interest earned over and above the?
The real rate of return is the amount of interest earned over and above the: a. discount rate. b. tax rate. c. inflation ... Read Answer >> 
At yearend 2004, the Federal Reserve reported moderate economic growth of 3% ... ...
The correct answer is c). The real interest rate, also referred to as the inflationadjusted return, factors the eroding ... Read Answer >> 
How is it possible for a rate to be entirely riskfree?
Find out whether there really is such a thing as a riskfree rate of return, and learn why taking the idea of riskfree rates ... Read Answer >> 
What is the difference between real and nominal interest rates?
Learn what nominal interest rates and real interest rates are, how real interest rate takes into account the inflation rate, ... Read Answer >> 
Can real interest rates be negative?
Discover the circumstances that can cause real interest rates to be negative and learn how to calculate the values of real ... Read Answer >>
Related Articles

Insights
What's a Real Rate of Return?
A real rate of return is an annual percentage investment return that’s adjusted for inflation, taxes or other factors. 
Managing Wealth
How Interest Rates Affect Property Values
Along with their impact on mortgages, interest rates affect capital flows, the supply and demand for capital, and an investor’s required rate of return. 
Investing
RiskFree Rate of Return
The riskfree rate of return is the theoretical rate of return of an investment with zero risk. The riskfree rate represents the interest an investor would expect from an absolutely riskfree ... 
Investing
Understanding Market Risk Premium
Market risk premium is equal to the expected return on an investment minus the riskfree rate. The riskfree rate is the minimum rate investors could expect to receive on an investment if it ... 
Investing
More Ways to Evaluate Portfolio Performance
The Jensen measure is another tool investors use to include risk when measuring portfolio performance. 
Investing
What Investors Should Know About Interest Rates
Understanding interest rates helps you answer the fundamental question of where to put your money. 
Investing
How Interest Rates Affect Property Values
When interest rates fall, real estate prices tend to increase. Why? Find out here. 
Investing
Interest Rates Explained: Nominal, Real, Effective
Interest rates are divided into subcategories. Smart investors look beyond the nominal or coupon rate of a bond or loan to see if it fits their objectives. 
Investing
Retirement Planning: Why Real Rates of Return Matter Most
Here's how to plot your real rate of return, understand your "personal inflation rate" and safeguard your retirement funds against inflation. 
Financial Advisor
A Guide on the RiskAdjusted Discount Rate
When a project or investment faces higher amounts of risk or uncertainty, it may be appropriate to utilize the riskadjusted discount rate.
RELATED TERMS

RiskFree Return
The theoretical rate of return attributed to an investment with ... 
InflationProtected Security  IPS
A type of fixedincome investment that guarantees a real rate ... 
Nominal Rate Of Return
The amount of money generated by an investment before expenses ... 
RiskFree Rate Of Return
The theoretical rate of return of an investment with zero risk. ... 
AfterTax Real Rate Of Return
The actual financial benefit of an investment after accounting ... 
Timeliness
A proprietary rating system used to rate stocks while taking ...